Ohio's gambling expansion: From an outright ban to casinos

How the state went from banning all gaming to embracing its many forms

Mar. 9, 2014

Gamblers play the slot machines as the new Hollywood Casino Columbus opens Oct. 8, 2012, in Columbus. It took more than 30 years and four failed initiatives for Ohioans to approve four casinos in 2009. / Kantele Franko/AP

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CentralOhio.com

Weird Ohio gambling laws

• If you’re betting your friend $10 on the outcome of the Ohio State-Michigan game, make sure you wager at your home. Making the same bet at the stadium is public gaming, a minor misdemeanor punishable by a $150 fine. • All money collected for March Madness, Super Bowl and other pools must be distributed to the winners. It would be illegal to collect $500, distribute $450 then spend the remaining $50 on beer or nacho cheese dip. • Bingo games must be licensed through the state attorney general’s office, but school raffles are not. Source: Ohio State Bar Association’s “Law You Can Use,” Ohio Revised Code

Over the past 40 years, economic woes, competition from other states and changing attitudes have pushed Ohio out of its staunchly anti-gambling stance, experts said.

But that doesn’t mean the doors will open to all gambling. The state severely limits skill games and Internet cafes, and the state attorney general recently declared video bingo at veterans’ halls unconstitutional.

The difference between what’s legal and what’s illegal often depends on how easily state officials can regulate it and how consistent the revenue is, said David G. Schwartz, director of the center for gaming research at the University of Nevada, Las Vegas. Some forms, such as sports betting, are extremely volatile.

“You don’t want to have to say we’re not buying fourth-grade textbooks because one team beat another,” Schwartz said.

Evolution of gambling

Acceptance of gambling in Ohio, and the nation, has come in waves, said Alan Silver, a gaming industry expert and assistant professor in the restaurant, hotel and tourism program at Ohio University.

Lotteries helped finance the Virginia colony and universities, such as Harvard and Yale, in the 17th and 18th centuries, but corruption led many states to ban gambling starting in the 1830s, said Silver, citing the research of I. Nelson Rose, a professor at Whittier Law School and gaming law expert. Ohio officials joined that anti-gambling movement, adding a permanent ban into the 1851 constitution.

Gambling was revived following the Civil War when several southern states, most notably Louisiana, sponsored lotteries to rebuild during Reconstruction, Silver said. But additional corruption led the U.S. Congress to ban lottery sales across state lines in 1895.

The most recent wave of gambling started in the 1930s when the Great Depression left states strapped for cash, Silver said. Ohio legislators approved wagering on horses in 1933 to create jobs and raise revenue.

Ohio’s first revision of its constitutional ban on gambling came in 1973, when 64 percent of voters approved a state lottery. Because of America’s history with lotteries, they were an easier sell than other types of gambling, Silver said.

“The public becomes more and more desensitized to the morality issue of gambling, thanks to incremental exposure first by lotteries and charitable bingo, then Indian gaming, finally legalized gambling at or near home,” he said.

But casinos remained a tough sell. It took more than 30 years and four failed initiatives for Ohioans to approve four casinos in 2009. Promises of millions in tax revenue, concerns about competition from surrounding states and a lessened concern about the morality of gambling all contributed to the slim victory.

“It seems like the public is becoming more accepting of gambling,” Schwartz said. “They don’t want people to tell them what to do.”

Even though casinos have missed the mark on projected revenue, it’s unlikely voters will reverse their decision. Ohio’s constitutional ban on gambling has been all but ignored, said Rob Walgate, vice president of the anti-gambling American Policy Roundtable.

“We pretty much have it all now here in Ohio,” Walgate said.

Playing by the rules

Gambling is regulated by a plethora of state agencies because of the piecemeal way Ohioans added its many forms.

The racing commission regulates horse racing, but racinos’ slot machine-like video lottery terminals are monitored by the Ohio Lottery Commission. Charitable bingo and sweepstakes cafes are monitored by the Ohio Attorney General’s Office. Casinos are monitored by the Ohio Casino Control Commission, which technically has authority to regulate skill games, but has done little to monitor them to date.

If you’re confused, you’re not alone; customers are, too. People will call the casino commission when they have a question about video lottery machines, said John Barron, deputy executive director for the Ohio Casino Control Commission.

But having multiple agencies regulating gambling can cause more than confusion: “When you have multiple groups enforcing gaming, you have added costs, increased personnel, overlapping personnel and no unified philosophy on gaming in a state,” Silver said.

Pete Thomas, chief of the Ohio Attorney General’s Charitable Law Section, said each agency has its own expertise and motives. If charitable bingo, which benefits nonprofit organizations, was overseen by the same group that regulates for-profit casinos, then charities might receive less attention, he said.

But lawmakers have preferred this complicated form of regulation to unregulated gambling: skill-based games were greatly limited in 2007, and sweepstakes cafes were effectively banned last year.

Skill games were like slot machines but required the player to stop the wheels to avoid the chance element required in gambling. Internet or sweepstakes cafes sold Internet or phone time to play games, which required chance and not skill. Both were severely limited by new laws.

Some businesses that stopped selling sweepstakes games after the 2013 law have switched back to skill games, Thomas said. The Casino Control Commission, which was given authority to regulate them, is seeking guidance from the Joint Committee on Gaming and Wagering to understand their role.

The next bet

Although sweepstakes and skill games are far from gone, Ohio’s next gaming headache could come online.

Americans spent nearly $3 billion on illegal offshore gaming sites in 2012, according to the American Gaming Association.

To date, only New Jersey, Nevada and Delaware have legalized online gambling, but others are considering it. Last month, Delaware and Nevada governors signed an agreement to allow for-profit online poker between the states.

“Make no mistake: Online gaming is here to stay. The government cannot put the Internet back in the bottle,” American Gaming Association Geoff Freeman told members of Congress in his testimony advocating for regulation and taxing of the games.

But Silver is concerned that legalizing online gambling would threaten brick-and-mortar casinos, which have already performed short of projected revenue.

The addition of Internet gambling might require another constitutional amendment because gambling is limited to the four casinos, Barron said.